The problem is still earnings. If the profit is not there, no matter how many hundreds of millions Corel will have in sales, the stock will go up very little. No matter how good the reviews are, without profit the stock price will only go up a little.
Do the math: even if Corel has 0.25 per share profit this year (1997), at a multiple of 30, that's only a stock price of $7.50 at the befinning of next year. This is not good enough. And who can say whether they will even have 0.25 profit this year? They really need 0.50 and higher to go near the all-time high of 1995 (of around $19).
Their advertising is down, which is good. They are more focused now for sure (spin-off; no more silly edutainment titles; more emphasis on core business and graphics applications). All their main NEW products are out: WebMaster Suite, Lumiere, Print & Photo House, Click & Create, etc.
Also, major releases are on the way: Office for Java, WP 8, Draw 8, and new versions of the CAD Software.
So it seems like they are more focused and with fewer expesnes. Their major product offerings are out for the public now to buy. What we need is those buyers, because Corel now has all these products with good reviews and good brand recognition. As the Doctor said, they are in "maintenance mode," which is exactly that. So, with many buyers we will have a good profit, otherwise, I'm afraid there isn't a whole lot the Company can do other than lower expenses even more. What we need is 0.50 profit per share, which we will likely only see (if all goes well) in year 1998.
The two other unknowns are the Corel Computer Company spinoff, and the future of Office for Java. They can be a major bonus, or not, although these clearly appear now as positive developments.
The most we can do is spread out the word on Corel: post all over the Internet our good experiences with Corel products, recommend them to friends and family, etc. etc. We really do need those buyers.
For this year, though, I cannot see Corel going beyond $9, if earnings per share are not expected to be higher than 0.25.
Just my humble opinion.
Skye
(all dollar figures in US dollar). |
